21 Fund managers in Ghana have been banned from taking investments after investors were not able to withdraw their funds. According to a Bloomberg report, as much as $1.6 billion of investments have been trapped. Now Ghana’s regulatory authority has intervened to stop the damage from escalating further.
Almost one-third of total assets that private finance management firm looks after has been tied up in bonds, direct private-equity stakes, and as fixed-term investments with banks. Almost 70,000 investors are unable to cash out their investments. SEC of Ghana did not reveal all the names of finance management firms as the investigation is currently going on. SEC is trying to found out if any of these firms broke the law by placing investors funds into illiquid assets.
Are investors losing trust in the traditional investing system?
It is most likely that after this incident, investors would lose confidence in the investment structure of Ghana. This incident would also provide a solid case for why investing in cryptocurrencies is much better than investing in traditional financing system. Liquidity of funds in cryptocurrencies is much faster and secure. Investors in Ghana may turn to bitcoin or other digital currencies in the future to avoid getting in such a fiasco. Many from the crypto community have commented on the issue that how investments should not require middlemen.
Investors in Ghana will have to wait for a long time before they can cash out their investments. This is just another incident when the traditional investment system has failed. More and more people are now adopting alternate investment methods such as bitcoin to put their hard-earned money.
